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Underground construction costing taxpayers BILLIONS

April 15, 2021

There’s an underground economy in the construction industry and it’s costing you money.

The number of crooked contractors is on the rise in Ontario which means a whole lot of problems for both the construction industry and taxpayers.  In fact, since 2009, it’s estimated that revenue losses from underground construction activity have spiked 30%*. This is a big problem in a number of ways.

Tax Fraud

Illegitimate contracts cost taxpayers money.  How much money?  A recent study by the Ontario Construction Secretariat estimates between $1.8 and $3.1 BILLION annually*.  That’s billions of dollars that are not being collected and distributed to government programs like CPP, EI, WSIB, and investments in important infrastructure programs.

Uneven Playing Field

Because these contractors are saving in other areas, many are undercutting their bidding on jobs.  Low bids are hard to compete with, especially if you’re complying with the law. This includes making investments into proper training for employees, access to proper PPE and increased protocols due to Covid-19, as well as payment of WSIB, CPP, EI and Employer Health tax premiums.  Legitimate contractors are paying the price because they are following the rules. Does this seem fair?

The Worker Suffers

Let’s talk about the biggest issue: The impact to the worker.  Illegitimate contactors are improperly classifying their works as “Independent Operators” in order to avoid paying taxes.  Only 22% of independent operators are registered with WSIB which means close to 84,000 independent operators are not paying WSIB premiums*.  Workers who are injured or sick are left without health insurance, employment insurance or retirement benefits.  Many illegitimate contractors are taking advantage of the Covid-19 crisis and high unemployment rates, hiring individuals eager to get back into the work force at sub-par wages while also ducking overtime premiums.

It Needs to Stop

IBEW CCO Executive Secretary Treasurer, James Barry, agrees that this problem needs to be addressed. “It hurts everyone.  Less taxes going into the system translates to less investments in vital infrastructure such as hospitals, subways and highway maintenance. It puts a huge strain on the fiscal health of the province and country, especially in times like these where many people are relying on emergency government programs and jobs created from government infrastructure spend.”  But it’s not just about the taxpayers.  “Ultimately it’s the worker in these situations who suffer the most.  Those labelled as Independent Contractors are taking a risk, especially if they have not received proper training or if their work site fails to meet proper health and safety guidelines.  It’s very sad to know these people are being taken advantage of. Situations like this fuel our passion to help organize these workers.”

Take Action

Want to help? Call your members of parliament and local municipal politicians to ask them to stand up to tax fraud. Visit to learn more.

*Source: Ontario Construction Secretariat, Prism Economics & Analysis, The Underground Economy in Ontario’s Construction Industry, 2019

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